Interesting Insights To The Converged Infrastructure Market

It’s no secret that converged infrastructure solutions – preintegrated or prevalidated stacks of compute, storage and networking hardware – are growing in popularity, but a new study from Technology Business Research sheds a little light on who is buying the systems, why, and what happens after they do so. Customers are deploying converged systems to accommodate a wide range of workloads, said Christian Perry, TBR’s senior analyst for data centers, but the workloads that influence the purchases of converged systems are not always the same as those actually deployed after purchase. This reveals that customers are finding use cases for these systems beyond what they expected prior to purchase, he said.

According to the study of more than 400 IT and LOB decision makers at medium and large enterprises, large U.S. enterprises will spend more than $3.8 billion in the next 12 months on converged systems. The average budget allocated for a CI solution is almost $900,000, with a quarter of respondents anticipating to spend more than $1 million. Vendors covered in the study include Dell, EMC, Fujitsu, Hitachi Data Systems, HP, Huawei, NEC, IBM, NetApp, Oracle and VCE.

IDC has predicted that worldwide spending on CI will hit $17.8 billion in 2016, up from $4.6 billion in 2012. With more than $80 billion spent annually on server, storage and network datacenter hardware, converged systems already represent a small but sizeable chunk of the market, and interest is growing, with 30% of the participants of a recent Zenoss study having already adopted CI, with another 51% actively considering it.

The market is dominated by three vendors – HP, IBM and Cisco – but there are enough second-tier competitors to avoid any chance of oligopolistic behavior competing for the fastest growing segment of the x86 market, according to Forrester analyst Richard Fichera. For instance Hitachi Data Systems and Dell both made recent additions to their CI lineups. Gartner reported that the market for integrated systems is growing strongly, with revenue increasing 53.7% year over year in 2Q12.

TBR found that adoption of converged systems is gaining momentum across a wide range of industries, including retail, manufacturing, government and healthcare, with financial institutions and banks leading adoption rates. The primary driver over the last few years has been tighter budgets, said Perry, and from that, the need for simpler solutions.

“Data centers don’t have the people from a numbers or skills perspective. We see a much larger x86 footprint and that builds complexity.”

Going into the study, TBR thought customers were buying CI solutions because they needed more easily managed systems, and systems they could target to specific workloads. The research company also wanted to get a broader perspective on CI in the marketplace.

“We wanted to talk not just to IT, but to LOB personnel,” said Perry. “We see the IT structure in enterprises is flattening, you don’t have that IT silo anymore. IT must work more closely with LOBs to understand and meet their needs.” There was a 60:40 split between IT and LOB respondents.

As part of the study, TBR looked at how systems are being used from a workload perspective. “The theory was that the workload influenced the purchase decision but those workloads wouldn’t necessarily be the same deployed after purchase, or be the primary workload after purchase, and that actually bore out.”

Most purchasers said they would recommend them to their peers. Another finding, a lot of data center customers are using more than one vendor in their environments, which surprised TBR. “So they’re growing not just on use, but across brands,” said Perry. He attributed the multi-vendor adoption in part to the varying vendor product portfolios and marketing approaches.

Data center workloads are being very heavily deployed on converged systems, which plays well to Oracle’s favor, as well as all the major players, he said, because they can add on non-CI solutions such as storage. However, while CI is gaining momentum, Perry doesn’t see an end to point solutions. He expects to see the emergence of micro servers, i.e. ARM-based systems, later this year, which will lead to server tiering similar to what is already happening in storage.

Another alternative to CI is IT as a service, what he calls “an awesome opportunity to manage a really complex ecosystem. When you talk about ITaaS and service-driven environments, hardware vendors are viewing them as not so much as a threat but an opportunity.”

Looking ahead, Perry said vendors are going to focus on the management software that sits on top of the largely commodity hardware that everybody is using. “It’s that management layer that’s really going to define the market moving forward. If that happens, and it happens in a fluid manner, we will see converged systems really become a larger part of IT environments moving forward.”